Companies all over the world have always tried to create and capitalise on competitive
advantages, ensuring profitability and long term survival. Due to the increasing competition
in most markets, mainly caused by globalization, liberalisation and better information of the
customers, the need to gain advantages in competition is now more essential than ever.
This essay, labelled “Cultural diversity is a source of international competitive advantage.
Critically evaluate”, shall point out the complexity of this topic.
“What business strategy is all about; what distinguishes it from all other kinds of business
planning - is, in a word, competitive advantage. Without competitors there would be no
need for strategy, for the sole purpose of strategic planning is to enable the company to
gain, as effectively as possible, a sustainable edge over its competitors.” Keniche Ohnae
(http://www.quotationspage.com/quote/8183.html: accessed on 30.11.2005)
Michael Porter, professor at the Harvard Business School, stated that competitive
advantages depend on different factors like the availability of resources, the size and
sophistication of the market or the type of strategic networks. (Schneider and Barsoux,
1997) He also said that choosing the right strategies make the company unique, build
brand reputation or set the right goal. (Porter, 2005)
In general, competitive advantage is often associated with specific business operations
like mentioned above.
Little people think that also cultural diversity provides a source of competitive advantage. [...]
At a glance
- Applies Hofstede’s five cultural dimensions to international business
- 21 sources in the bibliography
Contents
1. Competitive Advantage and Cultural Diversity
2. Cultural Differences in Organisations
3. Communication and International Markets
4. Cultural Diversity and Human Resources
5. Hofstede’s Cultural Dimensions
6. Conclusion
Aims and Topics
This essay critically evaluates whether cultural diversity can provide an international competitive advantage. It considers both the opportunities associated with a diverse workforce and the challenges of managing cultural differences across organisations and markets.
- Cultural diversity and competitive strategy
- Culture shock and organisational culture
- Cross-cultural communication and international markets
- Human resource management and multicultural teams
- Hofstede’s cultural dimensions in business
Excerpt from the Book
Business Management and Cultural Diversity
Cultural diversity is a great opportunity to bring new ideas, creative input and innovative thinking in an organisation. Many companies believe that a diverse workforce helps to create a competitive advantage.
Because of globalisation many people are confronted with a high diversity of cultures, languages, religions, characters or peculiarities. Therefore, most of our societies and organisations have to be multicultural with the familiar or strange aspects.
Concerning cultural diversity many companies make use of the so called diversity management which is the ability and the expertise to steer the diversities as well as the similarities in an effective and successful way.
But it is also obvious that cultural diversity brings along disadvantages.
When moving to another country in order to work there it often starts with total confusion. People become members of a foreign culture including new beliefs, ideas and values and they often notice that their expectations do not coincide with reality. Also organisations which decide to set up a subsidiary in another country have to take such things into consideration. This phenomenon is labelled cultural shock and it often lasts for a long time. There are many companies where it is obvious that employees from other countries and cultures suffer from isolation, anxiety, helplessness and performance deficit, for example if a German manager has to go to Africa for a special business project. (Marx, 1999)
Therefore, these organisations have to ensure a high qualified training in order to develop or to maintain a competitive advantage.
In general, many companies try to avoid cultural clashes between employees by developing an own culture known as the corporate or organisational culture. The strength of the organisation's culture is one of the most fundamental competitive advantages. Values, rules and expectations of the organisation are used by all company members and are given from one generation to another. (http://www.quintcareers.com/jobseeker_glossary.html: accessed on 30.11.2005)
The company Procter&Gamble for example believes that: “A fully engaged and leveraged diverse work force is a competitive advantage. Our goal is to grow that competitive edge by fostering an inclusive culture.” (http://www.pg.com/company/who_we_are/diversity/global/index.jhtm: accessed on 30.11.2005) The employees of the company represent a rich mix of the world's population. Corporate culture affects the lives of many people to a greater or lesser degree. In Japan for example it is really strong, whereas in other countries like Spain a so called family culture is more important. (Lewis, 1999)
Section Summaries
1. Competitive Advantage and Cultural Diversity: The essay introduces competitive advantage and asks how cultural diversity might contribute to it.
2. Cultural Differences in Organisations: The discussion considers diversity management, culture shock and organisational culture, including an example from Procter & Gamble.
3. Communication and International Markets: The essay examines cross-cultural communication and the adaptation of products and business practices to local markets.
4. Cultural Diversity and Human Resources: The discussion relates a diverse workforce to human resource management, creativity and international business, with reference to Hewlett Packard.
5. Hofstede’s Cultural Dimensions: The essay uses Hofstede’s dimensions to discuss differences in values and business practices across countries.
6. Conclusion: The author reflects on cultural awareness, human capital and the potential contribution of multicultural teams.
Keywords
cultural diversity, competitive advantage, international business, diversity management, organisational culture, culture shock, cross-cultural communication, globalisation, human resource management, multicultural teams, Hofstede’s cultural dimensions, cultural awareness
Frequently Asked Questions
What is the essay about?
It examines the relationship between cultural diversity and international competitive advantage.
What are its central themes?
Its themes include diversity management, organisational culture, cross-cultural communication, human resources and international business practices.
What is the main question?
The essay asks whether cultural diversity can be a source of international competitive advantage.
What method does the author use?
The author develops a critical discussion using published literature, company statements, online sources and lecture material.
What does the main discussion cover?
It addresses opportunities and difficulties associated with cultural diversity, including culture shock, communication, market adaptation and the management of diverse employees.
Which keywords characterise the essay?
Key terms include cultural diversity, competitive advantage, diversity management, cross-cultural communication and Hofstede’s cultural dimensions.
How does the essay use Hofstede’s framework?
It discusses the five cultural dimensions in relation to differences in management, decision-making and business practices across countries.
Which companies are mentioned?
The discussion refers to Procter & Gamble and Hewlett Packard in relation to diversity, as well as Chevrolet and McDonald’s in examples concerning international markets.
- Quote paper
- Stefanie Hoffmann (Author), 2005, Cultural Diversity is a source of international competitive advantage., Munich, GRIN Verlag, https://www.grin.com/document/55112
